U.S. Economy on a Promising Path with the Boost from the Inflation Reduction Act

WASHINGTON – Treasury Secretary Janet Yellen asserted on Monday that the Inflation Reduction Act, a law enacted in 2022 that stimulated significant investments in infrastructure, manufacturing, and climate goals, has been instrumental in driving the US economic recovery.

Yellen stated, “Our goal over the past year has been to transition the economy from rapid recovery to sustainable growth. Our progress thus far demonstrates that we are on the right trajectory, even as we remain vigilant about potential challenges and uncertainties.”

The Treasury chief highlighted the historic creation of more than 13 million new jobs since President Joe Biden took office, the recovery from record inflation, and an unemployment rate comparable to the lowest in 54 years. She made these remarks before the International Brotherhood of Electrical Workers 357 Training Center in Las Vegas.

Yellen attributed the progress, in part, to “Bidenomics,” a term used to describe President Joe Biden’s economic growth strategy, which includes the Bipartisan Infrastructure Law, the CHIPS and Science Act, and the IRA, which was signed into law one year ago.

The term “Bidenomics” surfaced in political discourse over the past year, initially used by Republicans to criticize high inflation and interest rate hikes aimed at curbing it.

As economic indicators improved this spring, Democrats seized the opportunity to embrace and reframe “Bidenomics” as a positive term, similar to how former President Barack Obama rebranded the Affordable Care Act as Obamacare.

In her remarks on Monday, Yellen highlighted the stabilization of headline inflation, which rose by 3.2% in July compared to the peak of 9.1% in June 2022. She also emphasized the growth in average hourly earnings as evidence that “workers are better off than they were last year.”

Yellen stated, “The continued strength of our labor market amidst our battle against inflation is particularly impressive. We understand that progress is rarely linear, but I firmly believe that we can continue reducing inflation while maintaining a healthy labor market.”

Additionally, Yellen noted that US companies have committed over $500 billion to manufacturing and clean energy investments since January 2021.

Yellen remarked, “The surge in US factory construction is a uniquely American tale that is unparalleled in other countries.”

In the past year, there have been announcements of nearly 80 clean energy manufacturing facilities or expansions, surpassing the total number from the previous eight years combined, according to the American Clean Power Association. Senate Democrats also reported plans from dozens of companies to invest in manufacturing facilities in more than 20 states.

Despite strong economic indicators, Republicans have continued to criticize the administration’s handling of the economy. Representative Jason Smith, R-Mo., pointed to persistently high prices for goods and services following the July jobs report.

Smith, the chairman of the House Ways and Means Committee, stated, “‘Bidenomics’ has led to a surge in prices for everything from gas to groceries to homes, and the deliberate use of interest rates to combat inflation puts the brakes on the economy, including the job market.”

Brian Deese, former director of the National Economic Council under Biden, recently emphasized the need for Democrats to effectively communicate the economic impact of the IRA to voters in the run-up to the 2024 election.